With effect from 2010, a housing property’s tax value will be based on its total area, type, age and geographical location.
You are required to provide information about the total area of all primary rooms (primære rom - PROM) in your property. If you do not know the area of P-ROM, you can state the net living area (boareal - BOA) of your property.
Information about P-ROM and BOA can be found, for example, in purchase and property appraisal documents. For information about how to calculate the net living area, see skatteetaten.no/boligverdi (in Norwegian only).
You can submit information via skatteetaten.no/boligverdi or by SMS. The enclosed form can also be delivered, or sent, to your local tax office.
Your reply must be received by 15 October 2010 at the latest in order for the new tax value of your housing property to be taken into consideration when calculating the amount of tax to be deducted from your earnings in 2011.
Who receives the letter from the Tax Administration?
Letters and forms are sent to persons registered as owners of one or more dwellings in Norway. Cohabitants who are joint owners, each receive a letter and a form. Spouses who live together receive one letter and one form.
What are the financial consequences of the new rules?
The change in the dwelling's tax value will only influence your wealth tax, not your income tax. Although the new rules involve an increase in the average tax value and the total basis for wealth tax, the increase in the basic tax-free allowance will mean that, for the majority of people, wealth tax will either be reduced or remain unchanged. Young people are often not liable to wealth tax because they are in the process of setting up a home and have debts. In addition, old-age pensioners and some single parents with low incomes will be taxed less on their dwellings as a result of changes in the tax limitation rule.
Calculations from the Ministry of Finance conclude that 120,000 fewer persons will pay wealth tax and that about 615,000 will have their tax reduced, while wealth tax will increase for 155,000 taxpayers. The total tax reductions (the increase in the basic tax-free allowance and changes in the tax limitation rule) will amount to NOK 760 million, 310 million of which will benefit old-age pensioners and single parents. Persons whose tax will be reduced by more than NOK 6,000 have an average gross income of about NOK 300,000. Persons for whom tax is expected to increase by more than NOK 15,000 have an average income of NOK 3 million.
How is the new tax value calculated?
Under the new rules, the tax value is assessed based on a price per square metre calculated annually by Statistics Norway (SSB). The price per square metre is meant to reflect the estimated market value per square metre and is based on statistical information about sold properties (type of dwelling, size, geographical location and age). Whether the dwelling is in a densely or sparsely populated area is also taken into account.
The tax value of a primary dwelling (where the owner of the house is registered as resident in the Population Register) will amount to 25 per cent of the estimated price per square metre, multiplied by the area of the dwelling.
The tax value of a secondary dwelling (any other housing properties that you own) will amount to 40 per cent of the estimated price per square metre, multiplied by the area of the dwelling.
What is P-ROM?
A P-ROM is any room that can be defined as living quarters in your dwelling. Access to a P-ROM must be via a door or staircase.
P-ROM include
- Porches, halls, hallways, staircases
- Living rooms, basement sitting rooms, sitting rooms with a fireplace, TV lounges, attic rooms
- Kitchens
- Bathrooms, shower rooms, toilets, utility rooms
- Bedrooms
- Studies (home office, computer room, media room, library)
- Common rooms, wardrobes, changing rooms and play rooms
- Exercise rooms (must have fitted equipment, for instance wall bars)
- Furnished recreation rooms (weaving workshop etc.)
- Furnished halls between P-ROM, staircases between P-ROM and halls including staircases between the rooms mentioned above.
Examples of what does not constitute P-ROM
- Garages
- Unfurnished rooms in basements/attics
- Closets
- Technical rooms
- Storage rooms
- Halls including staircases between the mentioned rooms (regardless of furnishing and how much has been spent on them) are not considered to be P-ROM.
How do I measure the area of P-ROM?
When measuring P-ROM, measure the inside of the surrounding walls of the primary part of the dwelling. The inside walls between the primary rooms shall be included. The headroom must be at least 1.9 m and the breadth must be at least 60 cm. For parts of the dwelling that have sloping ceilings, areas up to 60 cm outside the area with 1.9 m headroom must nonetheless be included in the measurement, i.e. surrounding areas where the headroom is lower than 1.9 m.
What happens if I do not submit the information?
If the information has not been submitted by the deadline for submitting the tax return, the Tax Administration can stipulate the tax value by discretionary judgement.
Do I have to report the sale of a dwelling?
No, you only have to provide information about dwellings that you own at 31 December. This applies even if you have received a form concerning the sold property. The new owner of the dwelling must report information about the type of dwelling, the build year and area.
What is the difference between primary and secondary dwellings?
The dwelling that you live in is your primary dwelling. Any other dwellings that you own, such as commuter accommodation, are secondary dwellings. You do not have to report information about holiday homes (i.e. cabins etc.), dwelling houses on farms and dwellings abroad.